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CHAPTER VII Relations with the Government

48. The Central Bank shall accept deposits of the Government and make payments on behalf of the Government against such accounts. The Central Bank may assign another bank to receive these deposits and make such payments in accordance with the conditions prescribed by the Central Bank.

49. The Central Bank may provide various types of loans and advances to the Government in accordance with the following conditions: —
(a) The Central Bank may make temporary advances to the Government. The terms and conditions for each type of advance shall be prescribed from time to time by consultation between the Ministry and the Central Bank;
(b) Such loans and advances shall be guaranteed by interest-bearing government securities delivered by the Minister of the Ministry of Planning and Finance to the Central Bank. Such securities, with a maximum term of 184 days shall be negotiable instruments;
(c) The total of the loans and advances extended within any given year shall not exceed 20 per cent of the Government receipts of the previous year;
(d) Notwithstanding anything contained in sub-sections (a), (b) and (c), the Central Bank may advance additional loans to the Government on such terms and conditions as may be agreed in respect of subscriptions and other payments resulting from, or incidental to, the State’s membership in any intergovernmental organization, the State’s participation in any account thereof and any transactions and operations in connection therewith;
(e) Notwithstanding anything contained in sub-section (b) the Central Bank may agree to purchase, hold or sell Government securities with a maturity of not more than 365 days.

50. The Central Bank may agree to purchase government securities from financial institutions and the public and may sell these securities to financial institutions and to the public in general.

51. The total of outstanding advances of the various types of loans and credit facilities granted by the Central Bank under section 49 and the Central Bank’s holdings of securities purchased under section 50 shall, at no time exceed the amount agreed in the context of consultations regarding the State Budget. If the Central Bank considers that there is a risk that the limit may be exceeded, it shall submit to the Government a report on the Central Bank’s outstanding advances of the various types of loans and advances, credit facilities and holdings of securities, and the causes which could lead to an overrun of this kind, together with appropriate proposals to remedy the situation. The Central Bank shall continue to make reports and proposals at intervals not exceeding 6 months until such time as, in its opinion the situation is normal.

52. The Central Bank shall be entitled to receive essential financial and economic information and documents which the Central Bank shall analyze. The Central Bank shall present its views to the Government at the request of the Government or at its discretion.

53. The Central Bank shall assist the Government in preparing the State Budget, in order to determine a limit on the total credit which the Central Bank may extend to the Government during the following year.

54. The Central Bank shall be responsible for monitoring monetary and credit developments and aggregates, and for recommending to the Government the policies needed in order to attain the objectives in accordance with its aim.

55. The Ministry may assign to the Central Bank, the issuance of different types of securities under the Government Securities Act and the management of public debt under the State Budget Law enacted annually. Such assignment shall be in accordance with the terms and conditions agreed between the Ministry and the Central Bank.

56. The Central Bank shall advise the Government on the placement of its debt instruments with financial institutions and the public.